March 26, 2015
This is an advanced January 2015 version of the confidential draft treaty chapter
from the Investment group of the Trans Pacific Partnership (TPP) talks between the
United States, Mexico, Canada, Australia, Malaysia, Chile, Singapore, Peru,
Vietnam, New Zealand and Brunei Darussalam. The treaty is being negotiated in
secret by delegations from each of these 12 countries, who together account for 40%
of global GDP.
Reprinted from dailykos.com by Jonathan
Tasini
Here it is, for the world to see.
Per
WikiLeaks:
This is an advanced January 2015 version of the confidential draft treaty chapter
from the Investment group of the Trans Pacific Partnership (TPP) talks between the
United States, Mexico, Canada, Australia, Malaysia, Chile, Singapore, Peru,
Vietnam, New Zealand and Brunei Darussalam. The treaty is being negotiated in
secret by delegations from each of these 12 countries, who together account for 40%
of global GDP. The chapter covers agreements on investments from one TPP nation to
another, including empowering foreign firms to "sue" other states' governments, as
well as regulations around investor-state dispute settlements and tribunals. This
document was prepared by TPP investment chapter negotiators in advance of the
informal round of negotiations held in New York City 26th January to 1st February,
2015
Global Trade Watch has just provided an analysis of the leaked text via email (and
now on its website more details):
The TPP would grant foreign investors and firms operating here expansive new
substantive and procedural rights and privileges not available to U.S. firms under
U.S. law, allowing foreign firms to demand compensation for the costs of complying
with U.S. policies, court orders and government actions that apply equally to
domestic and foreign firms. This includes:
Foreign investors would be empowered to challenge new policies that apply equally
to domestic and foreign firms on the basis that they undermine foreign investors'
"expectations" of how they should be treated. This includes a right to claim
damages for government actions (such as new environmental, health or financial
policies) that reduce the value of a foreign firm's investment (what the leaked
text calls "indirect expropriation") or that change the level of regulation a
foreign investor experienced under a previous government (a violation of what the
text calls a "minimum standard of treatment" for foreign investors).
The leaked TPP text largely replicates the "minimum standard of treatment" language
found in previous U.S. pacts that tribunals have used to issue some of the most
alarming ISDS rulings. Tribunals often have broadly interpreted this vague "right"
to fabricate new obligations for governments that do not actually exist in the
texts of ISDS-enforced pacts, such as "not to alter the legal and business
environment in which the investment has been made." Due to such expansive
interpretations, the "minimum standard of treatment" obligation has been the basis
for three of every four ISDS cases "won" by the foreign investor under U.S.
pacts.
The text allows foreign investors to demand compensation for claims of "indirect
expropriation" that apply to much wider categories of property than those to which
similar rights apply in U.S. law. To the limited extent that "indirect
expropriation" compensation is permitted in U.S. law, it is generally available
only for government actions affecting real property (i.e. land). But the leaked
text would allow foreign investors to claim "indirect expropriation" if government
regulations implicate their personal property, intellectual property rights,
financial instruments, government permits, money, minority shareholdings or other
forms of non-real-estate property.
Foreign corporations could demand compensation for capital controls and other
macro-prudential financial regulations that promote financial stability. This
obligation restricts the use of capital controls or financial transaction taxes,
even as the International Monetary Fund has shifted from opposing capital controls
to officially endorsing them as legitimate policy tools for preventing or
mitigating financial crises. Proposed provisions touted as "temporary safeguards"
for capital controls would fail to protect many standard forms of capital controls,
including those successfully used by TPP governments in the past to ward off
financial crises.
The leaked text could newly allow pharmaceutical firms to use TPP ISDS tribunals to
demand cash compensation for claimed violations of the World Trade Organization's
(WTO) rules regarding the creation, limitation or revocation of intellectual
property rights. Currently, WTO rules are not privately enforceable by investors.
But the leaked TPP investment text could empower individual foreign investors to
directly challenge governments over policies to ensure access to affordable
medicines, claiming that they constitute TPP-prohibited "expropriations" of
intellectual property rights if ISDS tribunals deem them to violate WTO
rules.
There are no new safeguards that limit ISDS tribunals' discretion to create
ever-expanding interpretations of governments' obligations to foreign investors and
order compensation on that basis. The leaked text reveals the same "safeguard"
terms that have been included in U.S. pacts since the 2005 Central America Free
Trade Agreement (CAFTA). CAFTA tribunals have simply ignored the "safeguard"
provisions that the leaked text replicates for the TPP, and have continued to rule
against governments based on concocted obligations to which governments never
agreed. The leaked text also abandons a safeguard proposed in the 2012 leaked TPP
investment text, which excluded public interest regulations from indirect
expropriation claims, stating, "non-discriminatory regulatory actions " that are
designed and applied to achieve legitimate public welfare objectives, such as the
protection of public health, safety and the environment do not constitute indirect
expropriation." Today's leaked text eviscerates that clause by adding a fatal
loophole that has been found in past U.S. pacts.
Most TPP countries, including the United States, have decided to expose decisions
regarding the approval of foreign investments to ISDS challenge. Australia, Canada,
Mexico and New Zealand have reserved the right to pre-approve foreign investors.
But the United States took no exception for reviews by the Committee on Foreign
Investment in the United States of planned foreign investments to determine whether
they pose threats to national security.
The amount that an ISDS tribunal would order a government to pay to a foreign
investor as compensation would be based on the "expected future profits" the
tribunal surmises that the investor would have earned in the absence of the public
policy it is attacking as violating the substantive investor rights granted by the
TPP.
The text would submit the U.S. government to the jurisdiction of World Bank and
United Nations tribunals. All TPP nations have agreed to be so bound with the
potential exception of Australia, which has indicated that it might do the same,
"subject to certain conditions."
None of the structural biases or conflicts of interest inherent in the ISDS system
would be remedied. TPP ISDS tribunals would be staffed by highly paid corporate
lawyers unaccountable to any electorate or system of legal precedent. They still
would be allowed to rotate between acting as "judges" and advocates for the
investors launching cases against governments. Corporations launching cases would
still directly select one of the "judges." The text includes no requirements for
tribunal members to be impartial, reveal conflicts of interest or recuse themselves
in instances of direct conflict. There is no internal or external mechanism to
appeal the tribunal members' decisions on the merits, and claims of procedural
errors would be decided by another tribunal of corporate lawyers. The leaked text
provides tribunals with discretion to determine the amount of compensation
governments must pay investors and the allocation of costs, such as the tribunal
members' fees. A proposal that appeared in the 2012 leak of the text to standardize
hourly fees for tribunal members at the lower end of the range of fees currently
paid (about $375 per hour, compared to the $700 per hour that some tribunal members
receive) has been eliminated.
An overreaching definition of "investment" would extend the coverage of the TPP's
expansive substantive investor rights far beyond "real property," permitting ISDS
attacks over government actions and policies related to financial instruments,
intellectual property, regulatory permits and more. Proposals in the 2012 leak of
the text that would have narrowed the definition of "investment," and thus the
scope of policies subject to challenge, have been eliminated. Also omitted is a
proposal from the earlier leaked version that would not have allowed ISDS cases
related to government procurement, subsidies or government grants.
An overreaching definition of "investor" would allow firms from non-TPP countries
and firms with no real investments to exploit the extraordinary privileges the TPP
would establish for foreign investors. Thus, for instance, one of the many Chinese
state-owned corporations in Vietnam could "sue" the U.S. government in a foreign
tribunal to demand compensation under this text.
The leaked text reveals that U.S. negotiators are still pushing, over the objection
of most other TPP nations, to empower foreign investors to bring to TPP ISDS
tribunals their contract disputes with TPP signatory governments relating to
natural resource concessions on federal lands, government procurement of
construction for infrastructure projects, as well as contracts relating to the
operation of utilities. (In the leaked chapter, text that is not yet agreed upon
appears in square brackets; Public Citizen has seen a version of the text that
lists which countries support various proposals.)
More from Global Trade Watch:
The leaked text provides stark warnings about the dangers of "trade" negotiations
occurring without press, public or policymaker oversight. It reveals that TPP
negotiators already have agreed to many radical terms that would give foreign
investors expansive new substantive and procedural rights and privileges not
available to domestic firms under domestic law.
The leaked text would empower foreign firms to directly "sue" signatory
governments
in extrajudicial investor-state dispute settlement (ISDS) tribunals over domestic
policies
that apply equally to domestic and foreign firms that foreign firms claim violate
their new substantive investor rights. There they could demand taxpayer
compensation for domestic financial, health, environmental, land use and other
policies and government actions they claim undermine TPP foreign investor
privileges, such as the "right" to a regulatory framework that conforms to their
"expectations."
The leaked text reveals the TPP would expand the parallel ISDS legal system by
elevating tens of thousands of foreign- owned firms to the same status as sovereign
governments, empowering them to privately enforce a public treaty by skirting
domestic courts and laws to directly challenge TPP governments i n foreign
tribunals.
And remember why this is important:
Foreign corporations have used these claims to attack tobacco, climate, financial,
mining, medicine, energy, pollution, water, labor, toxins, development and other
non-trade domestic policies. Under U.S. "free trade" agreements (FTAs) alone,
foreign firms have already pocketed more than $440 million in taxpayer money via
investor-state cases. This includes cases against natural resource policies,
environmental protections, health and safety measures and more. ISDS tribunals have
ordered more than $3.6 billion in compensation to investors under all U.S. FTAs and
Bilateral Investment Treaties
(BITs). More than $38 billion remains in pending ISDS claims under these pacts,
nearly
all of which relate to environmental, energy, financial regulation, public health,
land use and transportation policies. Even when governments win cases, they are
often ordered to pay for a share of the tribunal's costs. Given that the costs
just for defending a challenged policy in an ISDS case total $8 million on average,
the mere filing of a case can create a chilling effect on government policymaking,
even if the government expects to win. [emphasis added]
By the way, the screams and groans you just heard are coming from the White House
and TPP supporters because when the elite New York Times--which has always flogged
so-called "free trade" and treated opponents of such deals as backward
people--writes
this, this deal is sinking fast:
An ambitious 12-nation trade accord pushed by President Obama would allow foreign
corporations to sue the United States government for actions that undermine their
investment "expectations" and hurts their business, according to a classified
document.
The Trans-Pacific Partnership -- a cornerstone of Mr. Obama's remaining economic
agenda -- would grant broad powers to multinational companies operating in North
America, South America and Asia. Under the accord, still under negotiation but
nearing completion, companies and investors would be empowered to challenge
regulations, rules, government actions and court rulings -- federal, state or local
-- before tribunals organized under the World Bank or the United
Nations.
Backers of the emerging trade accord, which is supported by a wide variety of
business groups and favored by most Republicans, say that it is in line with
previous agreements that contain similar provisions. But critics, including many
Democrats in Congress, argue that the planned deal widens the opening for
multinationals to sue in the United States and elsewhere, giving greater priority
to protecting corporate interests than promoting free trade and competition that
benefits consumers.
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